Mutual Gains Negotiation

1. Mutual Gains Negotiation

2. Course Objective • Gain a useful and practical understanding of Concepts of the Mutual Gains Negotiation Process, Strategies, Techniques, and Purpose • Develop the Ability to Apply Mutual Gains Concepts and Techniques to everyday negotiations, and Consultant Agreements

3. What is Negotiation? • Negotiate: To confer, bargain, discuss with a view to reaching agreement; to make agreements for; to settle; to conclude; to succeed in crossing, surmounting, accomplish • Latin: Negotium-business or Negotiatus-to carry on business

4. What is Negotiation? • Negotiation = Business • Negotiation can determine profitability and livelihood • Negotiation protects the interests of all parties • Negotiation is a critical step toward the successful completion of any project

5. Negotiation Is NOT…. • A Contest or Game • A method of determining a Winner and Loser • A means of carrying out a personal vendetta or grudge • A “one-size fits all” formula

6. Negotiations are Everywhere • In everyday life with friends and family • In politics and government • In business • In scholastics • In law; in and out of the courtroom • In every organization, regardless of its size or complexity

7. The Issue • Negotiations fail often • Mutual agreement is rarely achieved • Preconceived Arguments or positions are pushed onto the issue at hand • Time, efforts, and money are wasted • Relationships are damaged • Often parties leave in a worse position than they started

8. Why Negotiations Fail • Negotiations are viewed as a trade-off process (zero-sum) • Parties give into the three “E”s: Ego, Emotion, Escalation • Parties never develop a systematic, step-by-step approach to negotiation • Parties never realize how their behavior will affect others • We let “What we have always done” dictate what we do today.

9. Three Areas of Negotiation • The Process- how we go about our negotiation • The Substance- what we are negotiating for; what we see as “on the table” • The Relationships- often overlooked, and underestimated, and regularly the first thing sacrificed

10. Traditional Negotiations • Establish Extreme Positions: Always start at one end or the other and work toward the middle • Never accept or make the first offer • Never tell them what you really want

11. Traditional Negotiations • If you concede, concede reluctantly • Always be skeptical of the other side • Give them as little as possible

12. Traditional Negotiations • Usually involves “giving in” • Becomes a contest of wills • Strains relationships

13. Productive Negotiations • Achieve Set Goals • Produce Agreements that benefit all parties • Improve and sustain healthy relationships

14. Goals of Negotiation • Achieve an agreement that is acceptable to all- Satisfies all of our interests and enough of theirs- no one feels taken • Explore all options and select the best using legitimate criteria • Establish an agreement that can succeed

15. How to Achieve Goals of Negotiation • Focus on Interest- not position • Interest: “we have to really watch our budget” • Position: “there’s no way we are going to pay more than…” • Invent Options for Mutual Gain • Establish legitimate Criteria for evaluating interest • Determine your Best Alternative To a Negotiated Agreement

16. A New Model 4 Steps to Mutual Gains • PREPARE • CREATE VALUE • DISTRIBUTE VALUE • FOLLOW-UP

17. Step 1: Prepare • Determine your purpose and define your team • Estimate your BATNA • Try to improve your BATNA • Define your Interests • Try to estimate their interests • Prepare options that could benefit both parties

18. Determine Your Purpose and Define Your Team • What is my role in the negotiation, and who will assist me in the process? • Who will gather what information? • Who will participate in the negotiations? • Who has the authority in the negotiations?

19. Focus on Interests What are Interests? • Interests are the reason for positions • More than one position can achieve a particular interest

20. Focus on Interests • Identify the interest of all your stakeholders • Analyze and Prioritize your interests • Consider the other party’s interests • Identify personal and professional interests • Communicate interests in a clear and concise manner • Identify conflicting and compatible interest to establish common ground

21. Estimate Interests

22. Estimate Interests OURS

23. Estimate your BATNA • BATNA’s are not negative • A BATNA is your best option to not agreeing • Your BATNA has to be something you are willing to accept • Your BATNA should not be detrimental to your business • No Party should be forced into a contract they cannot live with

24. Prepare Options for Mutual Gains • Think about negotiations in a different light • Brainstorm, invite outside suggestions, be creative • Note the obvious without focusing on it • List options with positive statements (recognize the down-side, but emphasize the up-side)

25. Step 2: Create Value • Suspend criticism • Discuss the interests of all parties • Make suggestions without making commitments • Make the pie larger

26. Suspend Criticism • Listen • Evaluate, without criticism • Remove the person from the idea • View your counterpart as a partner not an opponent • Ask “Why?”

27. Discuss Interest • Always reveal your interest not your BATNA • State what you believe their interest may be • Listen, listen, listen… • Take careful notes • Focus on the issues, not the position • Ask “Why?”

28. Make Suggestions • Brainstorm with all parties • Invent without committing- “What if we…” • Propose multiple ideas together • Put the extremes on the table • Avoid the “Fixed Sum Game”- the “split the difference” solution • Load the table with ideas

29. Step 3: Distribute Value • Develop the relationship-build trust • Establish legitimate criteria • Suggest possible distributions • Settle on the strongest agreement

30. Develop the Relationship • Separate substantive issues from relationship issues • Honesty builds trust • Listen to their views and interests • Clarify-restate what’s been said • Recognize emotional reactions

31. Develop the Relationship • Examine preconceptions and biases • Attempt to identify their preconceptions • Try to understand their mind set- Where are they coming from? • Attempt to take a fresh approach • Remember, take a partnering approach

32. Establish Criteria • External standards of fairness • Market value, historical data, indices, averages, etc. • PennDOT Staff Hour Estimating Guide (SHEG) • Develop criteria to support your interests • Be open to theirs

33. Suggest Possible Solutions • Work to improve each suggestion • Get as far away from the BATNA as possible • At minimum – develop one solution that is fair to both parties

34. Step 4: Follow Up • Conduct Biennial Review of SHEG • Establish periodic reviews of process • Ensure controls/incentives are in place • Have a dispute resolution plan • Improve relationships • Continual metric evaluation

35. Strategies for Success • Change the game to problem solving • Reveal your interests and discuss theirs • Ask why (why not) to get past positions • Invent options without committing (what if)

36. Strategies for Success • Analyze mutual interests and conflicting ones to strike balance • Foster cooperative atmosphere • Discuss process and logistics before substance • Be creative

37. Strategies for Success • Ensure your interests have legitimate criteria • Identify examine and challenge all your assumptions • Listen for their assumptions without judging • Respond to reasoned arguments, never to pressure • Use objective criteria

38. QUESTIONS?DISCUSSION?